By Oh Young-jin
Staff Reporter
A look at the ups and downs in share prices through the first five months of this year, and in May alone, shows an interesting phenomenon, which some analysts call "counterattacks by yellow chips."
The yellow chips' counterattacks mean that the stocks of second or third players in some industries outperform those of leading firms or blue chips.
There are a couple of reasons for this. First, the yellow chip firms are small in market cap compared with industrial leaders so their prices tend to fluctuate more. Also, their drops in price as the result of the two financial crises in three years oftentimes proved to be greater than blue chips.
But in some cases, the yellow chips are simply outperforming blue chips.
One example is share prices of big sister Hyundai Motor and kid sister Kia Motors.
In terms of closing prices on May 20, Kia's share price ended up 48 percent from the end of year price, while Hyundai was up 15 percent.
Although much of the difference can be explained by their different cap sizes, it can't be ruled out that Kia is introducing K-5 and -7 models to great market expectations. Pre-sale orders for the K-7 were so great that they impacted the sale of Hyundai's latest edition of its mainstay Sonata.
The airline industry is also showing similar patterns.
Both Korean Air and its smaller rival Asiana Airlines have performed well. But Asiana outperformed Korean Air 100 percent against 31 percent in terms of rises in share prices between the end of last year and May 20.
The same rule of size difference obviously worked in these results but Asiana's stellar performance comes at a time when its mother company, Kumho Asiana Group, is in the middle of being taken apart due to cash flow problems from its takeover of Daewoo Engineering and Construction and the siblings fight for the control of management.
Now, the group is facing creditor-led restructuring, while Asiana may end up on the block for sale, according to some analysts.
Both Kia and Asiana continued to see their share prices going up this month despite a major bear run triggered by the financial crisis in the Euro zone.
In the telecommunication industry, SK telecom and KT are stuck in the same reversal of fortune.
SKT's share price has been down nearly 3 percent but KTis up 19 percent.
KT owes its good performance to CEO Lee Suk-chae's decision to push forward with the tie-up with Apple for its iPhone debut. Despite some setbacks such as security risks, the iPhone fever has hit Korea strong, with a growing number of firms providing their executives with one either free of charge or at a minimum cost.
In contrast, SKT, the biggest mobile carrier, is suffering from a saturated domestic market and a lack of new growth engines, even if it is trying to push ahead with its convergence efforts such as mobile banking. Its smartphone tie-up with Samsung is not showing any significant synergy effects against the iPhone fever.
In the semiconductor industry, Hynix is doing well thanks to an increasing demand from the revived economy, registering a 3 percent rise in stock prices. But Samsung Electronics has seen a 5 percent tumble. The comparison is made on a consolidated basis, meaning that Samsung's share prices reflected results in other areas of business such as mobile phone, white goods and flat screens.
Two Doosan affiliates have seen different paths in share prices.
Doosan Infracore has gone up 3 percent, while Doosan Heavy tanked 23 percent. It is widely speculated that the markets remain unconvinced over the group's cash flow capability after a series of sizable mergers & acquisitions.
In terms of price dips, yellow chips are performing better than blue chips.
Hyundai Engineering and Construction was down by 33 percent, while Daewoo E&C by 24 percent. Hyundai, under the control of creditor banks, has lost a key prospective suitor, when Hyundai Group is put under creditors' watch for its weak outlook from, among other things, the virtual collapse of its North Korean businesses. Its Mt. Geumgang tours have been closed for a year, while its Gaeseong industrial complex in North Korea is in danger of being closed at any time. Hyundai Group, being run by Hyun Jung-eun, the widow of Hyundai heir Chung Mong-hun, has been trying to take back Hyundai Construction in an effort to win legitimacy as the successor of the late group founder and tycoon Chung Ju-yung, against Hyundai Heavy Industries, owned by Mong-hun's younger brother Mong-joon, and Hyundai-Kia Automotive Group, led by his elder brother Mong-koo.
In the steel industry, POSCO fared worse than its rival Hyundai Steel, seeing its share price go down by 30 percent, compared with Hyundai's 8 percent.
POSCO has won the priority negotiating status in buying Daewoo International, a general trading firm and overseas resources explorer, beating Lotte Group.
The world's leading steelmaker sits on a pile of cash so its officials say that a negative impact from the Daewoo purchase on its overall cash flow would be minimal. Still, the drop in its share prices is taken as a sign of disapproval by its investors.
It remains to be seen how its undeclared attempt to buy Daewoo Shipbuilding and Marine Engineering. POSCO officials say that nothing has been decided on whether to go for another Daewoo bid or not but the steelmaker made an attempt to buy it but was forced to withdraw its bid because of a technical mistake.
S-Oil also has a reason to smile despite a general trough hitting the industry because its share price has dropped only 4 percent, compared with a 16-percent drop in that of industry leader SK Energy.